America's Oldest Homeowners Are Still In Crisis Mode

While the mortgage crisis seems to have fallen out of the news,
seniors in particular are still reeling from its effects.

Caught in a cycle of decreasing income but increasing expenses,
seniors have proven especially vulnerable to foreclosures.

From 2007 to 2011, more than 1.5 million older Americans lost
their homes as a result of the mortgage crisis, and millions more
were underwater (meaning they owe more than their home is
worth), according
to the AARP.

AARP DOCUMENTS EPIDEMIC

According to report
released by AARP in July, “millions of older Americans
are carrying more mortgage debt than ever before, and more than
three million are at risk of losing their homes.”

Key facts (as of December 2011) from the AARP report include:

3.5 million loans of people age 50+ were underwater

600,000 loans of people age 50+ were in foreclosure

625,000 loans were delinquent by 90 or more days

Seniors who are older and in the middle- and lower-income
brackets have been the hardest hit.. Homeowners who are 75 and
older have some of the highest serious delinquency rates, and
borrowers with incomes below $124,000 account for 85 percent of
foreclosures for homeowners aged 50 and over, according to the
report.

SENIORS MORE VULNERABLE

There are many reasons why seniors might find themselves in
foreclosure trouble, says Foster. “Primarily, we see elderly
clients refinancing their homes to get cash out in order to pay
credit card debt, medical bills and/or to give money to their
children and grandchildren,” she explains. “Older Americans need
to understand that it is a bad idea to take out more debt on
their homes at the stage in their lives where their incomes are
decreasing.”

Non-payment of property taxes, homeowners’ insurance premiums and
condo/homeowner association dues can lead to liens on a property
and, ultimately, to foreclosure, Foster says. Taking out a
reverse mortgage does not absolve homeowners of those
responsibilities. Retiring, loss of a job and death of a spouse
can also decrease seniors’ incomes, making foreclosure more
likely.To make matters worse, seniors are often easy targets for
mortgage and foreclosure rescue scams. Ones to look out for,
according to Foster, include:

Companies that promise to help seniors get caught up on their
mortgage payments, but the senior winds up signing title to their
property and all their equity away

Companies that promise to obtain loan modifications for
delinquent homeowners, requiring seniors to pay hundreds,
sometimes thousands of dollars, forcing them even further behind
on their mortgages

Companies that tell seniors there are laws created to keep
mortgage companies from foreclosing on them because they are
senior citizens, which is not true

The key is seniors “should not pay a company that promises to get
them a loan modification,” Foster insists.

WHAT CAN SENIORS DO?

Even programs created by the federal government have proved
unhelpful to this group of vulnerable citizens.

For instance, the Home
Affordable Refinance Program (HARP), launched by
President Obama to help stabilize the U.S. housing market, has
strict guidelines requiring homeowners to be current on their
payments.“To date, public policy programs designed to stem the
progression of the foreclosure crisis have been inadequate, and
programs that focus on the unique needs of older Americans are
needed,” noted the AARP in its report.

“It is not a program created to assist homeowners who are already
at risk of losing their home,” Foster says. “The time to look
into applying for HARP is well before one is in danger of falling
behind on their mortgage payments.”

Seniors who feel they are in danger of falling behind (as well as
those already behind) can, however, seek free housing counseling
and loan modification assistance from a local non-profit,
HUD-approved agency. And you don’t have to wait until you’re
behind on mortgage payments or in foreclosure to seek help, says
Foster.